Obama - The beginning

[TheMercenary]

Originally Posted by sugarpop

Hello! People! Spending IS stimulus! Why don't you get that?

Demoncratic talking point.

[TGRR]

Originally Posted by TheMercenary

Demoncratic talking point.

"Demoncratic"?

[Aliantha]

The only way an economy grows is if people are spending money. If no one's prepared to spend, no one's making a profit.

[classicman]

Originally Posted by sugarpop

Hello! People! Spending IS stimulus! Why don't you get that?

Originally Posted by Aliantha

The only way an economy grows is if people are spending money. If no one's prepared to spend, no one's making a profit.

If there is no confidence in the economy, those with money are going to keep it. The only ones spending will be the ones at the bottom of the scale who are too ignorant (no disrespect intended) to save. The economy need the general public, the middle and the wealthy to spend to survive and improve - period. No one disagrees on this. How to get this group to spend is the question. Talking the economy down and threatening certainly won't help.

[Aliantha]

People can't put off purchases forever. Eventually they have to start spending again. Usually that's when house prices drop so low that any old person can afford to buy one, so first off you have a whole new group of people buying houses which promotes growth in economic terms, but also in terms of labour. More jobs equals more spending equals more purchases equals more jobs etc etc etc. Inflation starts to rise and we all jump on the same merry go round again.

It's a cycle. It will correct itself eventually. Maybe some people will make wiser decisions next time round.

You don't always need the prettiest horse to get ahead.

[classicman]

Originally Posted by Aliantha

People can't put off purchases forever. Eventually they have to start spending again. Usually that's when house prices drop so low that any old person can afford to buy one, so first off you have a whole new group of people buying houses which promotes growth in economic terms, but also in terms of labour. More jobs equals more spending equals more purchases equals more jobs etc etc etc. Inflation starts to rise and we all jump on the same merry go round again.

It's a cycle. It will correct itself eventually. Maybe some people will make wiser decisions next time round.

People are only spending on the bare necessities though. Housing price will probably continue to fall for another year or two. People may be able to afford them, but getting the loans has become a much more daunting task. I was speaking with a client who is in that field and he was explaining to me how much more paperwork and scrutiny the applicants are dealing with. I'm not really sure thats a bad thing either. Perhaps the banks shouldn't have loaned just anyone money.

I have begun to wonder how any of these plans are going to work. Be it tax cuts or massive spending. IIRC, The Soviet Union spent massively during the cold war and that didn't work out so well, nor did Japans plan to get out of it's issues a decade a go. They tried to spend their way out and that failed.

[Aliantha]

Well, from my personal experience, the first place I bought which was about 15 years ago, we paid $85k for a lowset 3 bedroom brick and tile on a 700 square metre block and had to have 10% deposit, which was really no big deal at that price. That was at the bottom of the market after the recession we had in the early 90's. We had to have lots of stuff to qualify for the loan, but it was simple because the main criteria was the deposit and a steady job. Shortly after we purchased that house, the market started to improve and we sold it for over 30k more than we paid for it. (that was handy because the reason we sold it was because our relationship fell apart) House prices continued to increase and even today when prices have slumped slightly, you'd pay about 400k for that house, maybe slightly less, but it'll drop way more.

Banks here are already moving from low documentation home loans to full documentation home loans, and the days of 100% mortgages are pretty much over.

[sugarpop]

Originally Posted by Aliantha

People can't put off purchases forever. Eventually they have to start spending again. Usually that's when house prices drop so low that any old person can afford to buy one, so first off you have a whole new group of people buying houses which promotes growth in economic terms, but also in terms of labour. More jobs equals more spending equals more purchases equals more jobs etc etc etc. Inflation starts to rise and we all jump on the same merry go round again.

It's a cycle. It will correct itself eventually. Maybe some people will make wiser decisions next time round.

You don't always need the prettiest horse to get ahead.

Yes, but if people don't have jobs, then they can't buy houses, or anything else. Apparently, right now the only way to save jobs, or to create them, is the federal government. Sad, I know, but corporate America certainly isn't hiring.

[Aliantha]

There's a lot further to go down before anyone starts going up again. In the mean time, people will simply do the best they can with what's on offer. The fact that no one will have money is exactly why house prices will drop. Eventually they will get to a level that even low income earners can afford, and then the market will start to pick up.

In many ways, these stimulus packages that the US and Australian governments are offering are really just a bandaid cure for the inevitable. It's too late to stop what must happen now.

[sugarpop]

Well, I agree, somewhat, but I also think the stimulus, in the right form (spending), will keep the recession from going as deep and as long as it would if we do nothing, IF they spend enough. We are losing more than a half million jobs a month. Something needs to be done about that. The private sector isn't doing anything, they are cutting jobs. The only option left is government.

Why do so many people think government has no role in anything? Personally, I'm an anarchist, so I don't like a lot of government interference in my personal life. But IMHO, this is one of the roles government actually should play.

[Undertoad]

Why do so many people think government has no role in anything? Personally, I'm an anarchist

That word. I do not think it means what you think it means.

[busterb]

Me 2

[sugarpop]

I know what it means. And if it were possible to have a country with no government, that would be awesome.

[TGRR]

Originally Posted by sugarpop

I know what it means. And if it were possible to have a country with no government, that would be awesome.

Yeah. I like your shit. So I'll kill you and take it. Or maybe just enslave you. What happens to your family is up to my whim. Or the whim of someone even more fucked in the head than I am.

That's anarchy. Ain't it just AWESOME?

[TheMercenary]

Originally Posted by sugarpop

Why do so many people think government has no role in anything? Personally, I'm an anarchist, so I don't like a lot of government interference in my personal life. But IMHO, this is one of the roles government actually should play.

That is not anarchy nor is it the thinking of an anarchist. You talk out of both sides of your mouth if that is what you really think. You hail the efforts of Obama and the Demoncratic tax and spend plan but yet you say you want to keep government out of your life. You can't have it both ways and you certainly can't think that Obama and the currently Demoncratically controlled congress is going to conduct operations that are designed to stay out of the life of the population. That is not their plan.